Export duty to benefit ‘users, not farmers’

Mustaqim Adamrah ,  The Jakarta Post ,  Jakarta   |  Mon, 11/30/2009 9:20 AM  |  Business

The government’s plan to slap export duties on molasses may benefit domestic molasses users, but at the expense of local farmers, says the Indonesian Sugarcane Farmers Association (APTRI).

APTRI chairman Abdul Wachid said sugarcane farmers would lose their share of the international market once the duties were imposed.

He said farmers tended to sell molasses, which is derived from sugarcane, on the global market because local users, including big food seasoning producers, always met their molasses need from imports instead of from the domestic market.

Wachid, who is also a member of the House of Representatives’ trade and industry commission, spoke to The Jakarta Post on the sidelines of a commission hearing with Industry Ministry officials.

“They [food seasoning producers] have not used our products for two to three years because they say imported molasses meets their specification requirements, while domestic molasses doesn’t,” he said.

“And now global molasses prices are high, they are lobbying the government to [indirectly] control domestic prices.”

Wachid said big food seasoning producers had been demanding that local farmers sell molasses to them for less than US$1,000 a ton — less than the current international prices of between $1,350 and $1,400 a ton.

Otherwise, he said, they would ask the government to impose a 50 percent export duty on molasses.
He said farmers would agree on ideal export duties of between 20 percent and 25 percent, if necessary, to match international prices.

According to Wachid, global molasses prices stood at between $700 and $800 a ton in the past two years.

Molasses prices, he said, had skyrocketed because global molasses producers, such as Brazil, India and Thailand, had diverted their sugarcane production to produce biofuel.

In response to Wachid’s accusations, Industry Minister and Indonesian Chamber of Commerce and Industry (Kadin) chairman, Mohamad Suleman Hidayat, refused to comment when asked whether big food seasoning producers had been lobbying the government to impose export duties on molasses.

A source at the Industry Ministry said food seasoning producers had been importing molasses not because of the specification requirements.

“They [food seasoning producers] say the reason is never the specification requirement. It’s because it’s cheaper for them to buy molasses from outside than inside,” he said.

The source also said the government first planned to impose export duties on molasses in 2005, when global molasses prices were high, but canceled it for unknown reasons.

Later, food seasoning producers requested the government again impose export duties this year, he said.

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